My optimism about this quarterly ER is probably misplaced, but I do hope that at minimum this concept of losing money on every car is laid to rest with a profitable quarter. I've underestimated the fudsters many times before though.
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They used non-gaap in the past due to the lease accounting and the happiness guarantee from what I understand. Either way, people have always been able to trace back. We'll find out how TSLA does in an hour. I am hoping it'll be like that surprise Q113 but who knows.
There are so many questions with the main one on this forum being margin erosion and YTG guidance-- outside of the TMC world, Elon is the captain of a "sinking ship"
Hate to say it, but it won't be. It was laid to rest with the surprise profit quarter and yet it still lingers.
jesselivenomore
Member
Yes my concern is not with the earnings that Tesla will report, but with Wall st's estimates not taking into account a change in reporting and thus not being an apples to apples comparison.
For instance, if Tesla reports a 0.02 non gaap profit which was derived from gaap revenues, this may actually be a massive beat compared with Wall st estimates of a 0.09 non gaap profit derived from non gaap revenues. But instead, the initial reaction/reporting will be a miss of 0.07.
That was what 10 quarters ago? You give people's memory too much credit.
Can anyone enlighten me on the reporting? The way I read it was they won't use non-GAAP revenue calculation but it sounded like that was it - like they would still add back stock-based compensation. They discontinued the RVG so now GAAP financials don't take a hit from that plus we get a bonus $65+ million from expired RVGs from Q2 2013. I mean on reading that I almost thought they were doing that because it would make the financials appear better but it seems the consensus is different here... EDIT: OK, maybe not $65 million on expiring RVGs because a lot of people would have traded in for Autopilot/AWD etc.
racer26
Active Member
If my estimations are correct, 0.02/0.07/0.09 is not the sort of difference we're talking about. With the end of the earliest RVGs upon us in 3Q16 (meaning revenues deferred in GAAP from 2Q13/3Q13 are being realized in 3Q16 with the expiry of the RVG they're attached to), and with the cessation of issuing new RVGs which defer current revenues by 36-39 months, the GAAP numbers were already going to look a fair bit rosier than they have in the past. Add to that a record deliveries quarter, and record ZEV sales, and I'm expecting GAAP profits more like $1 or more. Sufficient that it doesn't matter if you compare apples and rutabagas, its still unquestionably a good beat on expectations.
Ok yeah kind of what I was thinking myself. So I guess we'll see in an hour or so who has it right... EDIT: I'm thinking the trick is a beat can look massive but $1 earnings is only $150 million or so so it isn't even that hard to swing that way with the line running smoother and reducing and/or stabilizing SG&A expenses.
jesselivenomore
Member
The RVG shouldn't have a big impact since they discontinued it beginning in Q3, but direct leasing still needs to be deferred in gaap.
My question is not with how Tesla will be reporting earnings, they've made that very clear. It is with Wall st estimates seemingly not reflecting this change.
I'm a bit nervous.
Please Elon... please.
Please Elon... please.
OK - but the $60 million or so of stock based compensation. Are they still going to be issuing non-GAAP earnings with that added back? (Like $0.40 or so) Or are they going to just report GAAP.
jesselivenomore
Member
So you are saying that the deferred revenues from Q3/13 which will now be recognized will over shadow the deferred revenues this quarter due to direct leasing.
That is possible, but still if Wall st estimates are not taking any of this into account the headline comparisons will cause initial confusion. You can't beat or miss expectations if the expectations are based on a different data set.
jesselivenomore
Member
Yes they will still be reporting non gaap earnings which exclude stock based compensation. What I am saying is that this non gaap earnings in the past was derived from non gaap revenues. But this time it will be from gaap revenues. Perhaps that will be a wash or even a benefit since you add back q3/13 revenues like uselesslogin said, but you just can't compare it to wall st estimates if they are still using non gaap revenues to derive non gaap earnings.
It will almost certainy reduce confusion, most of "WallStreet" works on GAAP. That has been one of the biggest perception problems with TSLA/SCTY. The whole point of having Generally Accepted Accounting Principles is to make it easier to compare companies by trying to use the same format to depict them. Moreover I think most analysts use GAAP numbers anyway for projections so it should make things significantly simpler and much more credible.
True, that is a potential issue.
But that is a self-inflicted wound by Tesla that wouldn't have happened if they used GAAP from the beginning. There is a reason that people use GAAP, it is Generally Accepted, so comparisons can more easily be made.
But the wound will be temporary since over time by using GAAP the right comparisons can be made.
Key words there are initial reactions. I am confident that most shrewd investors wiil catch the difference. CNBC on the other hand...
I'm sure some new type of FUD can be created, but this one should be pretty much buried now.
Mario Kadastik
Active Member
I remember that a while back there was a discussion on the RVG expiring and the deferred revenue and I understood that it wasn't going to materially affect the Q3 results as there were more complex mechanisms at play. I don't remember the details, but I had understood that it's basically amortized.
But maybe for the pure revenue number it gets added indeed (I think it somehow balanced out to be EPS neutral through other fields).
But maybe for the pure revenue number it gets added indeed (I think it somehow balanced out to be EPS neutral through other fields).
As I mentioned yesterday, Apple reported 1 cent more in EPS than analysts estimated.
The headline was Apple missed earnings.
And they didn't have any of this GAAP/non-GAAP nonsense.
People who will actually be able to move the stock will see past CNBC or other headlines. Your Uncle Bob may not after reading the headine, but he ain't moving the stock, so it doesn't matter.
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